How to Know if a Dealer is Ripping You Off

An abundance of car dealers operate with integrity and honesty, genuinely concerned about the welfare of the buyer. Others, however, take advantage of less refined negotiation skills or simple naivety. Despite an increase in consumer understanding of vehicle pricing, features, and deals via online resources, car dealers often still attempt to rip the buyer off. The negative connotation of the term “used car salesman” exists for a reason. Whether you’ve been around the showroom once or twice or this is your first time hunting for a vehicle, understanding common dealership red flags will ultimately save valuable time and money.

1. Is the Salesperson Rushing You into a Deal?

In the market for a new vehicle, you probably approach the dealership with questions and a sense of indecision. At times, when a salesperson senses hesitation or uncertainty, he or she will attempt to force you into a decision immediately. This may manifest itself in another buyer interested in the same vehicle, a deal that disappears in a day, or important questions glossed over. The goal? Provoking you to make an emotion-driven, panicked decision. If you are unsure of the vehicle, be willing to walk away and take time to think about it. Most vehicles and the dealerships they sit at will be around for another day. In some cases, walking away will signal to a salesperson your willingness NOT to purchase a vehicle resulting in a price drop.

Another downfall of rushing into a deal is the inability to research a vehicle you were not expecting to buy at the start of your visit. Some vehicles may have excellent specs and look pretty, but actual owners grade it poorly. Sitting at the comfort of your own computer at home, it’s easier to get objective reviews from industry professionals and customers from various online platforms. You could even go onto social media and message your community about a specific year, make and model. That type of research better arms a consumer to negotiate pricing, features and warranty coverages with a car salesperson.

2. Are You Negotiating from the MSRP?

The Manufacturer’s Suggested Retail Price is artificially bolstered. Thus, car dealers may offer the deal of a lifetime by stripping a few thousand dollars from the MSRP – in reality, the asking price is still ridiculously high. Inquire about the price the dealer paid for the vehicle, called the dealer invoice, and begin negotiation there.

An artificially high MSRP is standard industry practice. One reason is that car dealerships are normally independently owned and therefore separate from the vehicle manufacturer. In order for the dealership to make money, the manufacturer must set MSRP prices very high and sell vehicles to dealerships at a steep discount.  This allows the dealership to still provide some discounts from MSRP and still come out ahead.

3. Did the Financing Mysteriously Fall Through?

Financing is a common ploy for making extra money at the dealership. Car dealers may allow potential buyers to leave before financing is solidified, only to call a week later and apologize for a failed loan. After asking to relinquish the vehicle, you may be sold a different loan with higher interest rate. To avoid this scam, don’t leave the dealership until the loan is fully approved.

Alternatively, approach your retail bank prior to visiting a dealership to see what types of loans they can provide. A pre-approval from a bank can better position a buyer to execute a purchase with less risk of being taken advantage of. A loan against the equity of your home, may in some cases, be more prudent than a costly loan from a dealership. In many cases dealerships make significant profit on the financing portion of the vehicle sale, therefore it is best to avoid mentioning a pre-approval from your retail bank until after you have nail down a price. Ask to speak to a manager or threaten to walk if pricing magically goes up once it becomes clear you will not use dealership financing. As a general practice, interest rates on new vehicle purchases are materially lower than used car purchases because the collateral (the new vehicle) typically has more resale value in the early part of its life compared to an older used vehicle.

4. Have You Been Offered an Extended Warranty?

Shiny, impressive extended warranties may look appealing – however, the manufacturer warranty lasting a few years is often perfectly suitable for your new vehicle. The money saved on repairs, if one should occur, is often equal to the money spent on the extended warranty. Alternately, place the extra money you may spend on an extended warranty into an emergency car maintenance fund. If you never spend a dime, put the collection toward your next vehicle purchase!

Some situations may justify an extended warranty. For example, many Nissan vehicles come with a CVT transmission that fails at a higher rate than CVT transmissions from other vehicle manufacturers. If your research indicates there is a major repair you want to protect yourself from, an extended warranty in such a situation is not a bad idea.

5. Should You Accept Those Sparkly Extras?

Finally, extra vanity items – including rustproofing, paint sealers, undercoating, VIN etching, or fabric protection – add little value, purely profiting the dealer. Say no. Certain items are automatically tacked on, however. Pay close attention to the final sales invoice for extraneous costs. If you see unrequested extras, simply cross them off and ask for a corrected copy.

This brings up another important point: don’t feel dumb just because you are asking numerous questions. It’s not every day a person buys a vehicle. You are the consumer and a vehicle purchase is a major step for any individual or family. You should feel comfortable and get transparent answers on any topics that are not clear.

It’s not a bad idea to look up the customer reviews for a dealership prior to a visit. You might notice in positive reviews a certain salesperson’s name reappearing across numerous customers; that’s a positive sign to ask for that salesperson upon your arrival. Similarly, you might see the same name in numerous negative reviews; that’s a great sign to steer clear of that salesperson!

Customer reviews should not be relied exclusively however it is one indicator to keep in mind.

Advanced Transmission Center

At Advanced Transmission Center, we are dedicated to honesty, integrity, and quality transmission repair – every time. We take pride in our industry-leading customer satisfaction and that is apparent in our customer reviews for our Lakewood and Westminster shops. Every customer should be treated with respect, and this is why we are passionate about uncovering scams. We offer free customer towing, a free TrueTest Inspection, and fast, high-quality transmission repair!

To get in touch about repair today, complete our online contact form or call either of our two distinguished locations in Metro Denver: Westminster (Northwest Denver) at (303) 421-4140, or Lakewood (Southwest Denver) at (303) 922-4102. We look forward to meeting you soon!

Written by Advanced Transmission Center